(This is an abbreviated version of the question - which is posted fully in the answer section - as it contains a lot of information specific to the case)

We took over the running of a Store & PO early in 2007. The then only employee went straight onto Maternity Leave not opting to work for us. A year later we asked her if she would like to work for us and she said she would think about it. She finally agreed to work two 6 hour shifts on 2 days per week ... to cut a long story short, her attitude, conduct and performance were so appalling we actually lost customers! ... we tried everything we could to get along with her and, as a last straw ... cut her 2 days down to 1 and gave her a start date for that. She reacted very, very agressively ... and became most abusive.  Now we hear she is going to report us to a tribunal ... Can she do this? ... I should be grateful for your help.